BBB warns of 'dramatic' spike in cryptocurrency fraud

  • The Better Business Bureau warns that complaints about cryptocurrency fraud have increased nearly 450% from 2019 to 2021.

    The Better Business Bureau warns that complaints about cryptocurrency fraud have increased nearly 450% from 2019 to 2021. Bloomberg file photo by Chris Ratcliffe

 
 
Updated 3/24/2022 9:46 AM

No regulation and a lack of consumer education have led to a "dramatic increase" in cryptocurrency fraud resulting in significant monetary losses, according to a newly released study by the Better Business Bureau.

Complaints to the consumer protection agency about cryptocurrency scams ballooned nearly 450% from 2019 to 2021, the report released Thursday shows.

 

In 2019, BBB officials received 451 complaints reporting more than $4.9 million in combined losses related to cryptocurrency disputes. In 2021, the number of complaints had climbed to 2,465, with consumers reporting nearly $8 million in disputed losses.

There were also victim reports of Ponzi schemes, hacking, malware and ransomware attacks, according to the report.

Steve J. Bernas, president and CEO of BBB Chicago and Northern Illinois, said cryptocurrency scams jumped from No. 7 on the agency's list of riskiest scams to No. 2 in 2021.

"This has created a fertile environment for scams," Bernas said. "In fact, a virtual tug of war exists between the legitimate and fraudulent use of cryptocurrency."

The growth of scams and fraud in this sector could delegitimize more reputable cryptocurrency operations such as bitcoin, experts said.

Last summer, Illinois Attorney General Kwame Raoul's office issued a warning to ComEd customers that scammers were attempting to collect cryptocurrency payments by threatening to shut off power to the customer.

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"Scammers are demanding cryptocurrency because it is immediate and irreversible -- by the time you make the transfer, it is too late," Raoul said at the time. "It is imperative that people avoid becoming a victim by being aware that ComEd will not collect payments at kiosks that issue cryptocurrency. If you receive one of these messages, hang up and report the communication to my office."

Cryptocurrency accounted for the second-highest scam losses reported in 2021 to the Federal Trade Commission, the BBB report notes. Losses reported to the FTC in 2021 amounted to more than $750 million.

The BBB study shows one cryptocurrency operation called Coinbase was responsible for more than 3,000 complaints to the consumer protection agency over the past three years. The bureau has given Coinbase an "F" rating.

Anyone who believes they may have been a victim of a cryptocurrency scam is urged to file a report online with the BBB at, bbb.org/ScamTracker.

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